With an interest rate decision by the European Central Bank (ECB) looming large this week, hedge funds have turned more negative on the euro, cutting their net long positions in the currency by nearly 90% in just one month, according to a report by the Business Times.

With inflation remaining well above the ECB's 2% target, and with signs mounting that growth is deteriorating, economists and markets are effectively split over the ECB decision, with traders pricing just a 40 per cent chance of one more quarter-point hike on Thursday.

The euro has dropped by nearly 5% since mid-July, its longest streak of weekly losses since 2014 and a further fall may be on the cards if the ECB decides against an interest rate increase this week.

The report quotes Antony Foster, head of G10 currency spot trading at Nomura International, as saying: “Most hedge funds are bearish euro, and generally bullish the dollar.”